Here's Why Google Music Might Never Launch

At last May's Google I/O conference, engineering vice president Vic Gundotra demonstrated an upcoming service that would let users buy music online and stream it to any device they owned.

The service was supposed to launch by the end of 2010, but was delayed because of conflicts with record labels. Around the end of the year, a source told us that Google was approaching the record labels with sacks of cash to make it happen.

Now it's February, and still no Google music service. Android chief Andy Rubin has wrested control of the service, according to Businessweek. But a report on CNET yesterday says the company is STILL having trouble lining up all the licensing deals.

What's going on here? Why is a company with billions in cash having so much trouble launching what seems like a simple music service?

One person with extensive knowledge of the online music space speculates that the problem lies with the publishers -- the parties who own the rights to the songs. (This is different from the rights to the recordings, which are usually owned by the record labels.)

This person, who requested anonymity, is sure that Google has offered cash payments to record labels: "You don't get in the game without up front payments, so for sure that is happening."

But that's not enough, he explained:

Google is trying to launch a store where purchases go directly into your locker. The challenge is that the publishers want to be paid for EVERY download - even if it's a verified purchaser downloading a song they've purchased multiple times. It's outrageous to expect a music buyer to pay twice because they happen to download a song from home and work, yet that's the situation. This is why iTunes and Amazon don't allow repeat downloads for verified purchases.

How long will it take for Google to line the publishers up? This person thinks it might never happen: "I don't see anyone getting a license from the music industry to do a consumer pleasing personal cloud service."

That opinion may seem overly negative -- but here's what Sony Music executive Thomas Hesse told a panel at the MIDEM music conference just last week. "We are very uncomfortable with a model where you can just throw anything into the cloud and stream it, if what you threw into the cloud was not legitimately purchased....We will do everything in our power to enforce our rights in those kinds of situation."

Hesse was criticizing mSpot, a music locker service that launched last year without approval from the labels (ironically, mSpot was also featured at the Google I/O conference).

But the sentiment also seems to apply to the big guys.

EXCLUSIVE FREE SLIDE DECK:The Future of Media by Henry Blodget and the BI Intelligence Research Team.Get the Slide Deck Now »